Glass Bottle site to test funds' market dominance

Tomorrow's deadline for queries from potential bidders for Nama's 37.2-acre Irish Glass Bottle site in Dublin 4 is set to test the residential property market, and the agency's ability to deliver housing against an aggressive deadline.

Tomorrow's deadline for queries from potential bidders for Nama's 37.2-acre Irish Glass Bottle site in Dublin 4 is set to test the residential property market, and the agency's ability to deliver housing against an aggressive deadline.

It comes as building firms say they are being outbid as much as 30pc to 50pc for prime residential sites by cash rich global funds that in turn are increasingly building only for the so-called 'cuckoo fund' market.

Nama is seeking at least €125m for its 80pc stake in the Glass Bottle site, which is expected to attract interest from Irish builders Ballymore and Glenveigh alongside international developers and private equity funds. The agency will have to balance price with confidence the bidder can move fast to deliver much-needed housing.

The deadline for firm bids is October 10th. Nama will shortlist bidders by November 11 and intends to complete final evaluations and name a preferred bidder by March 2020.

Meanwhile, some builders have questioned whether land prices in Dublin have now exceeded levels where housing can be viably delivered.

Last month's €140m sale of a prime 3.75-acre development site on the former Kevin Street DIT to a US consortium - at a massive premium to its €80m guide price - is being cited by builders as evidence prices are moving at a rapid and unpredictable pace.

The former DIT college site will be redeveloped as a mix of offices and apartments. Industry source said the fact it was sold without specific planning contributed to a disparity between bids, because buyers have different views on what can be built and how far planners will be pushed for the site.

The winning bid by US-based investor York Capital and Dublin developer Westridge Real Estate saw off interest from major Irish builders including Johnny Ronan's Ronan Group Real Estate, Sean Mulryan's Ballymore, Joe O'Reilly's Chartered Land, and Pat Crean's Marlet Property Group, all of which could fall back on international private equity backers.

One source close to the Kevin Street process insisted the highest bid was significantly less than 30pc above the next best offer.

But some senior figures in the construction sector are now privately questioning whether the economics of developing can add up when prices are so highly influenced by outside capital. They say builders dependent on traditional bank and own-equity finance who target traditional sales are now priced out of Dublin's prime residential development market.

The higher prices private equity can drive means that developers must in turn target sites as super-prime high-rental schemes for cuckoo funds or hoard land and wait for house prices to rise.